Penrice Soda Holdings profit in line with prospectus forecast

Penrice Soda Holdings Limited today reported 2004-2005 earnings in line with forecasts made in the Company’s prospectus, issued ahead of this year’s successful $80 million IPO and subsequent ASX listing.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) were $16.93 million for the year ended 30 June 2005. The Company’s IPO forecast was $16.90 million.

The normalised EBITDA was after $8.65 million in positive adjustments for non-recurring items, principally related to the business restructuring and the sale earlier this year of the Dry Creek salt fields in South Australia.

EBITDA before these non-recurring items was $25.58 million.

Outlook
Penrice has forecast in its prospectus a rise in annual revenue to $140 million in the current financial year (up from $128 million), with expected net profit after tax of $10.2 million in its first full year as an ASX-listed public company.

A fully franked 2005-2006 annual dividend of 14.7 cents per share has been forecast

Penrice’s Chief Executive Officer, Mr David Reid, said the industry outlook was positive and consistent with Directors’ comments in the prospectus.

“Increases in soda ash revenue are forecast, with higher volume off-takes forecast by some customers and price increases to market rates for those customers whose contracts expired during the year,” he said.

“Global soda ash prices are expected to continue to rise as a result of energy & other cost increases together with global shortages of the product, in line with prospectus forecasts”

“The expansion of our sodium bicarbonate facility later in the current financial year is on track and as forecast in the prospectus will expand margins.”

In July, a re-start of operations at Penrice’s main Osborne plant in SA following a planned maintenance shut-down was delayed by an unprecedented failure of a pressure vessel.
The incident resulted in a loss of approximately eight days of soda ash and sodium bicarbonate production at Osborne to facilitate repairs to the vessel and safety checks of other plant and equipment. No injuries occurred as a result of this incident.

As previously advised to the market, Penrice expects the prolonged shutdown has had a negative impact of $750,000 on net profit after tax (NPAT) on the Company’s result in the month of July.

The impact on NPAT is a combination of lost production, increased costs of production in addition to the cost of remediation and testing to ensure a safe work environment for Penrice employees.

“Every effort is being made by management to recover this shortfall over the balance of 2005-2006 to enable the prospectus forecast to be achieved,” Mr Reid said.

“Penrice Directors remain confident that the company will be in a position to pay a dividend of 14.7 cents per share as detailed in the prospectus,” he said.

Penrice Overview
Penrice listed on the Australian Stock Exchange on 4 July this year following the successful completion of its Prospectus Offer. The IPO closed fully subscribed at an issue price of $1.93 and with a total of 45.0 million shares issued.

The South Australia-based Company is the only manufacturer of soda ash in Australia and is the leading supplier of soda ash and sodium bicarbonate to the local market.

Penrice supplies 77% of the Australian market with soda ash, a key component in the manufacture of glass. Soda ash is also used in the production of chemicals and detergents and in the mining industry.

Penrice's other major product is sodium bicarbonate in which it has 75% of the Australian market. The Company exports sodium bicarbonate to Japan, South East Asia and South Africa, where the product is used in high-end applications such as pharmaceutical products and healthcare.